The 1980s have seen a revival of interest in regional integration schemes for Africa, where coordination of trade policies (for example, in the form of a customs union) is viewed as a means of achieving regional economic integration. In Discussion Paper No. 1012, Research Fellow Paul Collier and Jan Willem Gunning take this objective as given and compare different forms of trade policy: unilateral, discriminatory multilateral and non-discriminatory multilateral. They then consider the opposite possibility, that is, viewing regional cooperation as a means of achieving a change in trade policy.

The authors argue that for Africa, a regional customs union is unlikely to realise net welfare gains (in the sense of trade creation dominating trade diversion) which cannot be attained through unilateral trade liberalization. Unilateral reform has often failed in Africa, however. A regional customs union tied to Europe with reciprocal free trade is likely to dominate unilateral liberalization in several ways. Most importantly, it would make trade liberalization credible and thereby easier to sustain. The EU could offer association accords to groups of countries which set up customs unions under supranational control. Association would imply reciprocal free trade, that is, the two markets, the EU and the African group would form a customs union. Such a set-up has several advantages, including making regional integration-promoting trade policy in Africa more feasible. The franc zone monetary unions offer a model for linking small, self-governing groups of African countries in a free trade agreement to the EU.

Trade Policy and Regional Integration: Implications for the Relations between Europe and Africa
Paul Collier and Jan Willem Gunning

Discussion Paper No. 1012, July 1994 (IT)